Ya Kun Kaya Toast International Strategy

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Analyze Ya Kun Kaya Toast's current operation and propose a 3 year international strategic plan

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  • Ya Kun Kaya Toast International Strategy

    1. 1. Bay Wan Ting | Chan Li Feng Carissa |Eu Sin Yi| He Jia Ling |Cyndy Lin Xin Yi | Hena Suhail Operation Analysis and Strategic Plan 360°Consultancy Team
    2. 2. 2 OVERVIEW OF YA KUN Current Operations Overall align with Ya Kun’s strategic vision of being a household name in Singapore and Asia 77 Stores in 7 Countries in 2012 Expansion into 4 New Countries in 2013 (in process)
    3. 3. 3 CONTEXT ✗Specific operation details i.e. site selection and potential franchise partner ✗Relations with existing franchisees ✗Exporting/ trading to neighboring countries ✓Focus on Singapore ✓ Remains the core business ✓Analyze café industry trends and identify opportunities ✓Propose recommendations Existing markets New market(s) ✓ Focus on expanding its international presence in other Asian markets beyond Singapore ✓Leverage on franchise success model • Industry: Chained Cafes • Timeline: 5 years (2014 to 2018) • Objective: Expand in Asia • Focus: Long-term strategic direction
    4. 4. 4 APPROACH Strengthen Expand Explore
    5. 5. Existing Markets
    6. 6. 6 SINGAPORE
    7. 7. 7 CAFÉS INDUSTRY Market Performance 7 0 50 100 150 200 250 300 0 0.05 0.1 0.15 0.2 0.25 0.3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Units GrowthRate(%) Years Units of Chained Cafes in Singapore 0 50 100 150 200 0 0.05 0.1 0.15 0.2 0.25 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sales(S$million) GrowthRate(%) Years Sales of Chained Cafes in Singapore Market Projection for 2014 to 2018
    8. 8. 8 COMPETITORS ANALYSIS Key Competitors identification:  Similar product offering  Brand shares  Overseas Operations
    9. 9. 9 PERFORMANCE EVALUATION 2008 2009 2010 2011 Ya Kun 3.8% 4.7% 4.4% 4.7% Toast Box 5.2% 5.7% 5.9% 7.5% Killiney Kopitiam 2.3% 2.5% 2.1% 2.7% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Brand Shares of Chained Cafes in Singapore ToastBox Ya Kun Killiney Kopitiam
    10. 10. OPERATION EVALUATION Factory  Under-capacity  Opportunity to expand No of Outlets  ToastBox (50)  Ya Kun (41)  Killiney (20) 10
    11. 11. 11 PROPOSED STRATEGIC DIRECTION Market Penetration Market Deployment Product Development Market Diversification New ProductsExisting Products NewMarketsExistingMarkets The Ansoff Growth Matrix 1 432 1 2 Convenience Grab- N-Go concept @ Tertiary Institutions Convenience Grab- N-Go concept @ MRT 3 4 New stores at Tourist Spots New Beverage-Tea
    12. 12. 12 TREND: Convenience  High percentage of takeaway for specialized coffee shops  Increasing busy lifestyles in Singapore PROPOSED STRATEGIES Market Penetration (Existing Products, Existing Market) Location: New Downtown MRT line Objectives:  Cater to Singapore consumers takeaway trend  Faster expansion to gain greater market presence and brand awareness Convenience Grab-N-Go concept @ MRT1
    13. 13. 13 Reasons cited for eating out Source: Ang, K.L., & Foo,S. (200a2) PROPOSED STRATEGIES TREND: Convenience Location: Tertiary Institutions (Polytechnics and Universities) Objectives: Gain brand acceptance and capture the youth market Market Deployment (New market, Existing products) Convenience Grab-N-Go concept @ Tertiary Institutions2
    14. 14. PROPOSED STRATEGIES Market Penetration (existing products, existing market) Location: i.e. Integrated Resorts At Sentosa, Marina Bay Sands, Gardens by the Bay and Botanic gardens Objectives: Reach out to the tourist to get Ya Kun’s brand known before venturing to other countries. New Stores at Tourist Spots TREND: Increased Tourists Arrivals  Tourists are growth driver for consumer foodservice Tourist arrivals 48.4% from 2009 to 2012 Tourism expenditure on 81.8% from 2007 to 2012  Consumers spend the highest in sales per outlet and are willing to spend more on F& B in leisure retail outlets 3 14
    15. 15. 15 TREND: Wider food menu  Serve all day product offerings  Food expenditures increased to 31% of value shares TREND: Healthy Menu  Singapore consumers seek healthy quality meals  Coffee and tea based beverages can easily be positioned as healthy TREND: Shift of focus from Coffee to Tea  Singaporean consumers are becoming more sophisticated in their choices of drinks  Expansion of independent cafes specializing in tea e.g. Twinings 4. New Product Tea Drinks Objectives:  To target the health conscious consumers who seek a healthier drink  To introduce new varieties e.g. Flower Tea, Ginger Tea, Herbal Tea 4 PROPOSED STRATEGIES
    16. 16. 16 Singapore Strategies 2014 2015 2016 2017 2018 1. Convenience Grab-N-Go concept @ MRT Source & Selection of Franchisee Tender for Locations Accept: Launch Outlet Reject: Tender for other Locations Accept: Launch Outlet Reject: Tender for other Locations 2. Convenience Grab-N-Go concept @ Tertiary Institutions Source & Selection of Franchisee Tender for Locations Accept: Launch Outlet Reject: Tender for other Locations Accept: Launch Outlet Reject: Tender for other Locations 3. Open stores at Tourist Spots Source & Selection of Franchisee Tender for Locations Launch Outlet Evaluate performance IMPLEMENTATION TIMELINE
    17. 17. RISKS & MITIGATIONS Type of Risk Risk Solution Unmanaged growth  Shortage of manpower due to sudden increase in production  Reduction in quality  Transportation problem due to over expansion  Uncontrollable Franchise management due to overwhelming number of franchisees  Brand Dilution  Hire part-time staff  Standard quality control procedures  Source for additional logistic support  Monthly meetings & updates  Managing of Brand message through Public Relations Unanticipated events • Fire in Ya Kun’s Singapore Factory • Implement work safety rules Operation Risk • Poor management by Franchisees • Updated Franchisee contract with Documentation and procedures for start-up & on- going process Relationship Risk • Miscommunication/lack of clear communication channels with Franchisee • Conflicting objectives • Have clear goals & communicate the goals • Embrace short term pain & long term gain 17
    18. 18. SCREENING EXPANSION OPPORTUNITIES Positive Chained Café Unit Growth OBJECTIVE Positive Chained Café Sales Growth Existing Operations KEY PARAMETERS To identify the countries with most potential for further franchising expansion CONSIDERATION SET 18
    19. 19. SCREENING INDICATORS * A Country@Rating indicator was used to assess the country risks across different countries. Measure the prospective business environment quality Key Indicator Weight Chained Cafes Growth 5 Country Growth 1.4 Country Risk* 1.6 Business Costs 2 Total 10 19
    20. 20. COUNTRY SCREENING GRID Key Indicator Weight China Indonesia South Korea Chained Cafes Growth 5 126.5 128.7 244.8 Country Growth 1.4 48.9 59.7 31.4 Country Risk* 1.6 53.3 26.7 80.0 Business Costs 2 73.5 90.2 36.3 Final Scoring 302.2 305.3 392.5 Rank 3 2 1 20
    21. 21. New Market
    22. 22. COUNTRY SELECTION Distance Proximity New Markets with no existing presence Emerging Markets Expertise in franchising business model Singapore's Free- trade partners Countries That Passed The Key Parameters Malaysia Thailand Brunei KEY PARAMETERS 22
    23. 23. COUNTRY SCREENING * A Country@Rating indicator was used to assess the country risks across different countries. Measure the prospective business environment quality Key Indicator(s) Weight (Out of a total sum of 10) Ease of doing business 0.5 Ability to operate efficiently in the country 2.5 Attractiveness of the local market 3 Market Forecast of demand 2.5 Country Risk* 1.5 23
    24. 24. COUNTRY SCREENING GRID Summary Key Indicators Weights Malaysia Thailand Brunei Ease of doing business 0.50 19.31 12.476 18.21 Ability to operate efficiently in the country 2.50 110.65 111.72 70.55 Attractiveness of the local market 3.00 119.30 132.16 42.74 Market Forecast 2.50 93.01 66.43 90.55 Country Risk 1.50 37.50 37.50 25.00 Final Scoring 10.00 932.96 904.36 577.58 24
    25. 25. 25 THAILAND
    26. 26. COUNTRY ANALYSIS Strategic Location  Linked with other SEA Infrastructure  Significant number of interconnected highways and a reliable internet broadband connection Government Initiatives for SMEs  “One-start-one-stop” centers cater to ease setting up business  Thai Insurance Catastrophe fund Import Duties  Faster and cheaper import comparison to other East Asia regions Demand for Franchises  Continued growth at an average of 15% 26
    27. 27. INDUSTRY TRENDS  Coffee growth forecast of a total volume CAGR of 4%  30% of Thai consumers report that the drink coffee regularly  Increase consumption of fresh coffee  Price-conscious seek lower price per cup (E.g. mid-priced fresh coffee THB 40 to THB 60)  Import tariffs for coffee beans were held at under 5% 27
    28. 28. DEMAND YEAR VOLUME/Tonnes 2011 2012 2013 2014 2015 2016 2017 2018 Fresh Coffee 2989 3123 3252 3377 3500 3640 3764 3893 Jams and Preserves (Tonnes) 7718 7949 8148 8311 8461 8579 8795 8966 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 28
    29. 29. Hai Yai CITY SELECTION Availability of infrastructure at the ports Presence of international airports KEY PARAMETERS Northern Central Northeastern Eastern Southern *Not covering 1. The exact location in the city and/or which mall to locate the outlets 2. Exact franchisee to work with 3. Exporting/Trading to neighboring countries 29
    30. 30.  To capture 0.5% of the total chained cafes’ industry market share  To further expansion and gain constant market penetration into other cities in Bangkok and beyond Bangkok OBJECTIVES FOR EXPANSION 30
    31. 31. Indicators Weightage Bangkok Phuket Hat Yai Population 0.2 92 5 3 No. of coffee house and shop 0.25 16.67 50 33.33 Consumer Expenditure on Food(USD, Million) 0.25 42.96 38.24 18.80 Cost of setting business (Labour and Rental) 0.2 17.00 50.00 33.00 Political stability 0.1 40.00 40.00 20.00 Total score 1 40.61 37.16 22.24 CITY SCREENING GRID 31
    32. 32.  890 coffee shops and cafes(mostly not serving the same food concept as Ya Kun)  Top two indirect competitors -Starbucks -Black Canyon Coffee  Westernized café concept  Existance of a Singapore homegrown Toast Café competitor: Toastbox  Ya Kun’s Point of differentiation Traditional Café concept Totally new concept from existing competitors 46% 13% 41% Brand Shares of Café Starbucks Black Canyon Coffee Others COMPETITIVE LANDSCAPE 32
    33. 33. Located in high-human mall in Bangkok Operating hours: 830am to 0930pm (Include weekends and exclude 20 PHs) Number of seats per outlet: 45 maximum One person approximately spend 45 mins in the outlet Targets at Mass Market Each outlet only sell kaya toast and coffee OPERATION DETAILS 33
    34. 34. Methodology Step 1 •Determine the average of number of transactions per café outlet in year 2011 Step 2 •Determine the average market share per café (%) in year 2011 Step 3 •Based on estimated market share (%) for Ya Kun, identify the average number of transactions in year 2011 for Ya Kun Step 4 •Calculate total revenue of transactions in year 2011 Step 5 •Used as a base point to project sales revenue from 2011 to 2018 MARKET & SALES REVENUE FORECASTING 34
    35. 35.  One transaction is consists of 1 coffee and 1 kaya toast  100% market share is shared among the 890 cafes in Bangkok as dated 2011  All of the transaction comes from Bangkok, the capital of the city  Close proximity between provinces of Bangkok  There is equal density in different province of Bangkok  Periodic fluctuations of the number of people patronising the shop is presumed to be accounted  Net inflation effect is going to be constant for years forecasted  An incremental of 0.1% market share is used to buffered against the effect of under-recording the number of transaction of café in Euromonitor International 2012 data  The franchisee’s upfront tenure fee of SGD 50,000 off and franchisee fees of USD 200,000 (overseas) are paid from the franchisee’s own capital  Ya Kun’s market share remains constant in the 5 years ASSUMPTIONS 35
    36. 36. Most Likely situation *Context: 1) Election is going to happen in 2015 2) Big players such as Starbucks and McCafe are opening more outlets till 2017 3) There is a moderate ongoing competition among chained cafes in Thailand GROWTH RATE Year 2011 2012 2013 2014 2015 2016 2017f 2018f Chained café 11.9 12.2 12.6 12.9 13.3 13.8 14.09 14.47 Growth Rate 2.52% 3.28% 2.38% 3.10% 3.76% 2.13% 2.66% Reduction: Competition by Starbucks and True Coffee opening more outlets 1.40% 1.40% 1.40% 1.40% Reduction: Election aftermath effect 7.00% Addition: 1 1 1 1 1 1 1 Net growth rate(%): 1.03 1.03 1.01 1.03 1.03 1.01 1.03 36
    37. 37. *Context: 1) Election is going to happen in 2015 2) There will not be new competitors offering the same products as us in the first year of operations 3) Competitors will employ slower rate of expanding more units GROWTH RATE Best Situation Year 2011 2012 2013 2014 2015 2016 2017f 2018f Chained café 11.90 12.20 12.60 12.90 13.30 13.80 14.09 14.47 Growth Rate 2.52% 3.28% 2.38% 3.10% 3.76% 2.13% 2.66% Reduction: Slower rate of competitors (Taking 50% of the competition intensity that exist in the most likely case) 0.70% 0.70% 0.70% 0.70% Addition: 1 1 1 1 1 1 1 Reduction: Election aftermath effect 7.00% Net growth rate(%): 1.03 1.03 1.02 0.95 1.03 1.01 1.03 37
    38. 38. * Context: 1) Intensive promotions from competitors such as starbucks and true coffee 2) Election happens earlier, the year we enter in, and aftermath prolong for another year(2016) 3) Rapid cafe outlets expansion by competitors GROWTH RATE Worse Situation 2011 2012 2013 2014 2015 2016 2017f 2018f Chained café 11.90 12.20 12.60 12.90 13.30 13.80 14.09 14.47 Growth Rate 2.52% 3.28% 2.38% 3.10% 3.76% 2.13% 2.66% Reduction: Competition by Starbucks and 94 c café opening more outlets 1.40% 1.40% 1.40% 1.40% 0.00% Reduction: Intensive promotion set by competitors 1.35% 1.35% 1.35% 1.35% 1.35% Reduction: Election aftermath effect 7.00% 7.00% Net growth rate: 1.03 1.03 0.93 0.93 1.01 0.99 1.01 38
    39. 39. Sales Revenue Forecasting Sales Revenue Forecast 2014 2015 2016 2017 2018 Most Likely Case (THB) 117,883.96 121,538.36 126,108.20 127,028.79 130,407.76 Best Case (THB) 237,402.27 226,481.77 233,412.11 236,749.90 243,047.45 Worst Case (THB) 48600.29 45368.37 45826.59 45542.47 46139.07 Most Likely Case (THB) Best Case (THB) Worst Case (THB) 40,000 90,000 140,000 190,000 240,000 290,000 AmountinTHB 39
    40. 40. Type of Risk Risk Solution Unexpected emergency Natural disaster (e.g Flood, earthquake) Political Risk (e.g. riots, bombs, protest, labour strike) “Catastrophe Insurance Policy “ Draft formal procedures Relationship Miscommunication/lack of clear communication channels with Franchisee Documentation and procedures for start-up Value-proposition Foreign exchange risk Fluctuations in the value of the trading and buying currencies Foreign currency deposit account RISKS & MITIGATIONS 40
    41. 41. CONTINGENCY PLAN Unanticipated event Course of Action Future Alternatives Singapore Factory unable to send shipment due to unforeseen circumstances (e.g factory on fire etc) 1. Approach existing network of suppliers to source for supplies 2. Form a database of suppliers for future reference 1. Explore into building new more factories in Singapore and Malaysia 41
    42. 42. Justification for when it is time to exit: Changes in market trends, the indicators that illustrate these could be:  Characteristic 1: Inability to breakeven in 3 years  Characteristic 2: The degree of loss is inflating each year  Characteristic 3: Even after intense promotion and pricing strategies does not appeal to the consumers  Characteristic 4: Human-traffic at Ya Kun Outlets in Bangkok fare poorly as compared to other F&B outlets within close proximity In any of the above scenarios, Ya Kun should try to intervene into understanding the forces and reasons behind such failures. Guidance, in the form of financial, training and skilled expertise should be translated. A buffer time of 1.5years will be given since the time of guidance. EXIT STRATEGY 42
    43. 43. Step 1 •During these 1.5 years, Ya Kun will monitor their progress and have constant feedback and reviewing sessions Step 2 •If there is no progressive changes seen from failed franchisee, Ya Kun will access whether they should change franchisee and exiting from the market Step 3 •Exit from the market only if: •1) Weak market forecast of demand •2) Uprising of direct competition •3) No availability of suitable franchisees EXIT STRATEGY 43
    44. 44. Strengthen Singapore  Increased Tourists Arrivals  Consumers seeking convenience  Shifting coffee to Tea Recommendations:  New stores at Tourist Spots  Convenience Grab-N-Go concept @ MRT/ Tertiary  New Beverage-Tea Explore  Growing café culture and coffee consumption  Local’s strong preferences for sweet food Recommendations:  High potential new market: Bangkok (Thailand)  Future expansion: Phuket and Hat Yai CONCLUSION Expand 44
    45. 45. Q & A Thank You 45
    46. 46. Back up slides 46
    47. 47. 47
    48. 48. 48
    49. 49. 49

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